Dot Capital is presenting an exciting opportunity to invest in a unique crowd sourced financial services company that combines aspects of FundingCircle, OnDeck and Kabbage with the tried and true business of factoring. Get in at a sub-$10M valuation with a modest investment that may produce results that will make an impact in your portfolio.
Dot Capital was founded by Joseph R. Saviano, a 22 year veteran of the alternative asset business. Mr. Saviano spent 16 years in venture capital with Baker Capital Corp before forming Dot Capital in 2013. Since forming Dot Capital, Mr. Saviano has organized five investment partnership to make venture investments. Dot Capital’s latest venture opportunity is Lyric Financial. Lyric Financial is seeking capital to build an automated cash advance platform to support its recent contract wins.
About Lyric: Lyric Financial, LLC was formed in 2008 with the mission of establishing a global retail platform for the funding of cash advances on royalties earned by content creators and owners (“rights holders”) in the $2 trillion dollar entertainment and media industry. Eli Ball, a music industry veteran, founded Lyric. Lyric chose the music industry as its initial focus, due primarily to Eli’s deep relationships and experience within the music industry, the efficiencies of the music royalty distribution ecosystem and the significant delay in its payment structure to rights holders.
Lyric’s advance product is designed to bridge the inherent payment gap in the creation of the royalty obligation and the fulfillment by paying it, all with minimal credit risk to Lyric. Lyric’s advances are technically the purchase of a royalty receivable owed by a specific royalty organization (factoring vs. lending). Lyric purchases the receivable from a client, the client assigns his royalty account to Lyric and the royalty organization pays Lyric directly. Historically this factoring has been done manually, via personal service, review and reconciliation of hard copies of statements, telephonic reference checks and physically assignment documents. To date, Lyric has funded over $15MM in advances with zero losses and an average transaction IRR of 30%. Since mid-2014, Lyric has socialized the idea of electronically integrating with the royalty organization to become more efficient and open up the market to the small under-served content creators that make up the majority of potential clients. Lyric has successfully sold one of largest music publishers, and has several other organizations in late stage negotiation on becoming Virtual ATM partners. Once launched, Lyric’s Virtual ATM will be the first electronic factoring business to content creators.
Bio: Joseph R. Saviano, 49, founded DOT Capital Corp. in 2013. Mr. Saviano has 28 years of financial and investment experience, including 23 years in alternative investments. Previously, Mr. Saviano spent sixteen years at Baker Capital Corp. (“Baker”) serving as a Partner and Chief Financial Officer. From 2001 to December 2012, Mr. Saviano was a member of the Baker investment committee, responsible for sourcing, monitoring and exiting portfolio investments. Prior to joining Baker, Mr. Saviano served as a VP at Harvest Partners and from 1992 to 1996 served as controller for the private equity funds of Apollo Advisors. Mr. Saviano serves as Chairman of the Executive Committee of the Angel Round Capital Fund, L.P., as a member of the Executive Council of Digital Entertainment Ventures, LLC and as an advisor to i-Banker Direct. Mr. Saviano earned a BS in Finance from Lehigh University and an MBA from Fordham University.
Dot Capital has led similar stage investments that represent over $5M of invested capital. Current investments include IIX, Inc., an Internet infrastructure provider, Cirruspath, Inc. and Carecloud, Inc., software-as-a-serve business to business software companies and Immedia Semiconductor, Inc. an Internet-of-things home security camera system. HumanDemand, Inc. is an example of a successfully early stage exit by Dot Capital.
Baker is a telecommunications, media and technology focused private equity firm and during Mr. Saviano’ s tenure he built a series of relationship with relevant industry experts and acquired software as a service, digital media, online services and other relevant sector knowledge. Mr. Saviano serves on several private company board of directors.
Investment Opportunity: Dot Capital is offering $1.1M of LLC interests to fund an equity investment in Lyric Financial. Dot Capital Lyric will acquire an approximately 11% interest in Lyric. The terms of the securities being acquired give Dot Capital Lyric investor’s seniority in liquidation, with a 1.5x liquidation preference, significant voting rights and customary rights such as, right of first refusal, participation and information rights. Dot Capital has modeled out the potential for superior returns as compared to publicly traded securities and investors get exposure to the fast growing, crowd sourced lending market through a proprietary investment opportunity.
Investment Strategy: Dot Capital is a venture capital firm focused on the digital economy. Wireless applications, software-as-a-service, digital media and internet infrastructure are its current areas of focus. Dot Capital believes, superior returns are achieved by revenue and profit growth.
Venture capital minimums of capital and strategic and financial planning are just a part of what Dot Capital Corp brings to its investment partnerships. Dot Capital feels perseverance and ingenuity are essential ingredients when building winning technology companies and it looks for entrepreneurs who demonstrate these qualities.
Investment opportunities are screened by filters developed since the principal’s entrance into the venture capital community in the late 90’s. Dot Capital will evaluate deals at all stages and it adjusts investment criteria based upon the situation. Referenced, management, technology and product are a must. Dot Capital’s principal has accumulated Board of Director experience across all target sectors and has established a broad network to source investment opportunities, management and business development relationships.
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